Saturday, August 18, 2007

As Beijing’s influence in Asia and around the world has grown, their common interests have forced Tokyo and New Delhi to begin warming their historically chilly relationship and to start forging closer economic ties.

“The key issue facing the whole region is how to accommodate the rise of China,” said Suman Bery, the director general of the National Council of Applied Economic Research, a New Delhi research group. Indian economists estimate that Japanese investment in India will reach $5.5 billion by 2011, compared with just $515 million in the 2006 fiscal year.

Consultants are trying, so far in vain, to coin the catchphrase, like “the Samurai and the Swami,” that will sum up the nascent strategic economic relationship between the countries.

Courting India has come slowly for the Japanese, who were highly critical of India’s surprise nuclear weapons test in 1998. While Japan is a large lender to India, until now it has not been a major investor or business partner. Instead, Japan has virtually sat on the sidelines while countries from Switzerland to Brazil cemented business alliances in India, where economic growth is about 9 percent a year.

Friday, August 17, 2007

Many areas have targeted medical equipment and supplies for for business and job development. This summary profile discusses some of the major trends in the industry that economic developers should be aware of. Contact Don Iannone for more information.

In 2006, the total value of the medical equipment and supplies market was approximately $89 billion, a 4.2% increase over 2005. Reflecting the growing medical requirements of an aging population, and the incidence of chronic diseases such as diabetes, the US medical equipment and supplies market is forecast to continue strong growth moving forward.

The most lucrative segment of the market consists of disposables such as syringes, catheters and dressings, which account for 40% of the total revenues. Opthalmic and IV diagnostic equipment and supplies each generate a further 11% of the market value.

The high cost of crude oil has driven up the price of oil-derived plastic resins used in the manufacture of many items of disposable medical equipment. In a bid to maintain profit margins, many companies have increased the retail price of such items or relocated manufacturing operations to low cost regions such as Southeast Asia or Latin America.

Leading companies include Johnson & Johnson, Medtronic, Baxter International, and GE Medical Systems. The market favors large companies with high levels of supplier power, who can provide broad product portfolios, competitive pricing, and extensive technological expertise.

A high degree of M&A activity is evident within the industry, especially with respect to larger players enhancing their IP ownership through the acquisition of niche, innovation-driven SMEs. High levels of R&D expenditure are characteristic of the industry, with companies recognizing a healthy innovation pipeline as a key strategy for organic growth.

Key Issues

Aging Population - As the baby boomer generation advances to old age, the US elderly population is growing rapidly, which in turn is increasing levels of medical treatment and hospital admissions. The medical equipment and supplies industry is therefore benefiting greatly from increased sales volumes and enjoys positive long-term sales forecasts.

Diabetes Epidemic - The increasing prevalence of diabetes mellitus is considered to have reached epidemic proportions according to the US Centers for Disease Control. It has been estimated that diabetes accounts for more than $130 billion of healthcare spending in the US annually. The market for diabetes diagnostic, monitoring, and treatment devices is set to increase considerably moving forward.

High Plastic Prices - The high price of crude oil and natural gas is driving up the price of petrochemical-based plastic resins required for the manufacture of many disposable medical supplies, such as syringes and catheters. Although much of the increased cost can be passed onto customers, many manufacturers have relocated their manufacturing plants to low-cost environments in Southeast Asia and Latin America in an attempt to preserve profit margins.

Significant Trends

Consolidation - The US medical equipment and supplies market favors the growth of large players. Larger firms are in a better position to negotiate favorable deals with group purchasing organizations (GPOs) and can afford the often prohibitive expense of product development including gaining FDA approval for new technologies. Smaller companies within the industry mostly represent niche technologies and are often targeted by larger players looking to increase their technological expertise.

E-Procurement - The growth in e-procurement and Internet sites featuring medical product and purchasing information has introduced significant price transparency within the market. This has increased the purchasing power of many healthcare institutions and GPOs, especially for high-volume disposable medical supplies.

R&D Expenditure - Maintaining a healthy innovation pipeline is key to protecting market share and maintaining revenues, with many companies continually increasing R&D expenditure in a bid to stay at the forefront of the industry. An increasing amount of research spending is currently being channeled into biotechnology, whose medical applications are becoming increasingly valuable.

The medical equipment and supplies market consists of the total revenues generated through the sale of laboratory apparatus; surgical and medical instruments; dental equipment; catheters, syringes, needles; diagnostic and laboratory disposables; wound management supplies; non-woven medical disposables; and all other related disposable medical supplies, valued at manufacturers selling price. Pharmaceuticals are not included.

Bray's shortsighted amendment to House bill 444 threatens to light the fuse on a political, tax-fueled border war between Kansas and Missouri lawmakers.

Bray, D-University City, opened hostilities with a raid on Kansas taxpayers' funds. The St. Louis area lawmaker's amendment, which the Republican majority in Jefferson City allowed to pass, eliminates an important tax deduction for Kansans.

The deduction, logically, lets Kansans who work in Missouri take Kansas property taxes off Missouri income taxes. Doing so is only fair.

Kansas, in turn, has acted neighborly by allowing the same deduction for Missourians who work in Kansas. Some would go further to say that cities in Kansas have been more than neighborly because they did not retaliate after Kansas City, Mo., placed an earnings tax on Kansas workers. In contrast to such neighborliness, Bray's bushwhacking amendment has proven about as welcome to Kansas as William Clarke Quantrill's raid on Lawrence."

I do not have the details of this situation and feel no need to take a position on the debate. The only thing I will say is that it would be a shame to see any disintegration of the fine cooperation between Kansas and Missouri for economic development. I also believe as the "war for tax revenues" escalates among governmental jurisdictions, we are likely to see more changes to tax codes in terms of who receives beneficial treatment.

Wednesday, August 15, 2007

Oakland County would like to expand on the 17 Swedish companies already doing business in Oakland County, said Maureen Krauss of Oakland County Planning and Economic Development."Oakland County has been very active in the Swedish market," said Krauss, who also is on the board of directors of the Swedish-American Chamber of Commerce. County representatives have traveled to Sweden several times.

"We have some good relationships and some good companies in Oakland County," Krauss said.

"We think it's a great market because they're very advanced in biotech and alternative energy. They like looking to the U.S. for opportunities for expansion."

There are now 840 foreign companies doing business in Oakland County, according to the county's economic development office.

Tuesday, August 14, 2007

A recently published report, "Culture, Creativity and Innovation: West Virginia in the New Economy," says WV policymakers should take the initiative by following these 10 suggestions:

1. Set priorities for spending based on what's critical for success for the state's long-term success (e.g., investing in universal preschool, paid family leave, university research and development and technology transfer programs, incumbent worker training and K-12 education reform). Other examples include: smaller class sizes, charter schools, "schools within schools," outreach to parents to become more involved, higher pay for gifted teachers and financial incentives for principals and teachers to work in worst schools.

2. Consider investments in education, public health and child development as part of an overall development strategy -- to be sustained in both good and bad times. The new imperative is lifelong learning.

3. Use business incentives judiciously and only in concert with improved transparency and performance checks, such as First Source hiring agreements.

4. Focus more attention on the homegrown economy, especially technical and financial assistance to new, young or small firms rather than on business attraction.

5. Make entrepreneurial education and financial literacy classes a requirement in all middle and high schools.

6. Improve and expand outreach to existing firms to marshal more proactive services to prevent closings, such as those caused by lack of business succession planning.

7. Invest in social capital -- community leadership skills and nonprofit management talent and administrative systems and improved community and economic development planning.

8. Use limited government services to direct and leverage private and nonprofit providers of existing business services.

9. Give frontline government staff more power to make decisions and to respond flexibly when delivering services rather than cutting staff myopically, paying them less and working them harder and harder.

10. Create realistic and measurable goals that reflect your development vision and values and rely upon objective economic analyses.

In sum, good government is good economic development. The revolution that has transformed private industry by establishing high-performance workplaces as the way to win in the global marketplace calls for competing on quality, not lowered wages. (The cheapest site for doing business, after all, is not necessarily the most profitable.)

Monday, August 13, 2007

The University of Southern Indiana says a new report shows that the school makes an economic impact of $150 million annually and an employment impact of 2,600 on the southwest Indiana economy.

The university says since its last report in 2000, it has implemented 12 of the 13 academic programs outlined as needed in the area. Overall, the report shows a need for the university to push science, technology, engineering and mathematics education and develop an entrepreneurial culture in the region.

Has the university been responsive to employers? Yes. Employers asked for a string of academic programs that closely parallel USI’s planned new programs through 2011, including specialties within the baccalaureate engineering program; a four-year major in criminal justice/law enforcement; and more graduate-level studies in sales management, communications, maintenance management, clinical nursing, and other health-related programs.

Healthcare professionals expressed a need for development of a health informatics program and continued graduation of registered nurses. Employers also expressed an interest in undergraduate programs in business economics, a blended business/engineering degree, manufacturing technology, environmental sciences, and degrees in logistics/transportation.

Overall, there is a desire for USI to push STEM (science, technology, engineering, and mathematics) education; develop an entrepreneurial culture in the region; and continue the strong emphasis on the core curriculum, which emphasizes communication skills, critical thinking, leadership, and collaboration.

Sunday, August 12, 2007

The Orange County Commission provided $500,000 for economic development programs at the University of Central Florida.

Commissioners also approved $100,000 each for the UCF Institute for Economic Competitiveness, UCF Small Business Development Center, UCF Small Business Advisory Board Council, UCF Technology Incubator and UCF Orange County Venture Lab. Money had previously been budgeted for the programs.

The UCF Institute for Economic Competitiveness provides research that supports business and community leaders in making informed decisions.

The UCF Small Business Development Center provides business seminars and one-on-one counseling for small business owners.

The UCF Small Business Advisory Board Council provides no-cost advisory boards to small businesses in order to help them increase revenue, retain jobs and create new jobs.

Cleveland, Ohio (My Hometown)

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Don is a health care management consultant, Reiki master, student of Zen and Thomas Merton's teachings, teacher, life coach, author, poet, and photographer. He is a Certified Reiki Master, holds an M.A. Degree in Consciousness Studies, with extensive studies in Buddhism and meditation, and he has completed graduate studies in Organizational Behavior and Economic Development. He holds an undergraduate degree in Anthropology. He and his wife Mary practice Reiki in the Greater Cleveland area.